Lemons and avocados enjoying strong markets

by Tim Linden | July 12, 2014

In Ventura County, north of Los Angeles, lemons and avocados often compete for the same ground, and many growers produce both crops. For a good portion of the spring and early summer, those two crops also competed as to which had the higher f.o.b. prices. But as the summer wears on, both markets are expected to come off their highs, though they should remain strong relative to previous years.

“We have a very strong lemon market,” said John Eliot, sales manager of Saticoy Fruit Exchange in Ventura, CA. “It is not extraordinary or unprecedented but it is a strong market that has been moving up slowly since the spring.”

He said the red-hot lime market in the first quarter of this year, which saw cartons of limes selling for as much as $135 for 175-size fruit, had a very positive effect on the lemon market. “We found out a lot about the substitutability of lemons. We saw some strong pricing and it has continued.”

Rick Goodside, domestic sales manager for Limoneira Co. in Santa Paula, CA, agreed that unusually strong demand for lemons has driven the market for the past few months. He said it has simply been a case of demand exceeds supply.

Eliot said the market was also strengthened because of a major reduction in the Argentina lemon crop. Though Argentina does not ship into the United States, it does service Canada and many other markets in the world. The Argentine crop was off 60 percent, according to Eliot, which meant fewer Chilean lemons available for shipment to the United States. Chilean shippers found a strong market for their lemons in many other places in South America and around the globe.

Discussing the situation on Tuesday, July 8, Eliot said the market was as high as $45 for the most popular packs and sizes. “It might hold for a couple of more weeks but I don’t think it will get to $50,” he said.

Joan Wickham, Sunkist Growers’ manager of advertising and public relations stated that “lemon demand continues to be very strong and we expect it to remain steady throughout the summer, as lemons are the perfect complement to summertime dishes, refreshing beverages and even household décor.”

She said lemons are finding increasing usage in homes, restaurants and bars as artisan cocktails are gaining favor. “From unique lemonades to mixed drinks, Sunkist is developing fun cocktail recipes that consumers can make at home to ‘zest up’ their summer entertaining.”

Mexico should start sending some lemons to the U.S. market within the next few weeks, and the desert deals of Arizona and California will get going in September. Hence Eliot said the long-range prognosis is for a more moderate market.

Goodside was a bit more bullish and predicted that the strong market could last well into September. He said Chile and Mexico will send fruit to the United States, but it might not be until domestic production ramps up in mid-September that a significant price decrease is noted.

But it has been a good run for California lemon growers, many of whom have also seen high prices on avocados.

The avocado marketing situation has been very straightforward this season. Predictably, after two years of close to 500 million pound crops, avocado trees in California under produced this year. Pre-season estimates had the crop in the 300 million range, which is probably right about where it will end up.

“We are close to 70 percent complete,” said Rob Wedin, vice president of fresh sales and marketing for Calavo Growers Inc. in Santa Paula, CA. “Demand has been very good and we’ve had strong pricing.”

Bob Lucy, president of Del Rey Avocado Co. in Fallbrook, CA, agreed. He said it has been a good run for California producers for the past several months, though a $5 per carton drop in the market price occurred in late June after the Fourth of July ordering concluded.

Both veterans of the avocado industry agreed that an oversupply of large-size fruit from Peru is the culprit. “The market has gotten soft,” Lucy said. “There is a lot of large Peruvian fruit available.”

Wedin said the influx of large fruit from Peru disrupting the marketing situation was “discouraging” and he expressed optimism that Peruvian shippers would lay off the large sizes and increase the volume of smaller sizes instead through July and August. As the California season wears on and gets deep into the summer, the fruit on the tree continues to grow and larger fruit is more common. The premium can be made on the smaller sizes.

Lucy expects the market to strengthen as Labor Day approaches and the California production winds down. While there will be some late fruit into September and beyond from Santa Barbara and San Luis Obispo counties, most avocado producers in Southern California will be finished by Labor Day. At that point, Lucy said the market could be wide open. Mexico will have some fruit but that is typically its low production period. Chile should not yet have entered the market with mature fruit. Peru should have fruit into the middle of September, but shipments from that region will be winding down.